The head of Britain’s main banking lobby group has warned the chancellor against a budget raid on the industry, arguing that it would undermine her aim of delivering sustainable economic growth.
In a letter to Rachel Reeves seen by Sky News, David Postings, the chief executive of UK Finance, said renewed speculation about increases to banks’ tax burden risked undermining their international competitiveness.
Mr Postings’ letter was sent earlier this week, just days after shares in the largest UK banks – including Barclays, Lloyds Banking Group and NatWest Group – slid amid fears of a renewed tax raid on the sector.
“Both the financial services sector and the wider investor community have… strongly welcomed your clear emphasis – most recently through the Leeds Reforms – on ensuring that the UK’s financial services sector has the right environment to be internationally competitive,” he told the chancellor.
“As you said in launching those reforms, it is vital to deliver certainty for banks operating here and ensure that UK banks can compete internationally and drive economic growth.
A report published last week by the Institute for Public Policy Research (IPPR) think-tank proposed that the chancellor use her November budget to impose an additional levy on bank profits – prompting an investor sell-off of shares in the main UK lenders.
Anxiety about higher personal and corporate taxes has gained momentum in recent weeks because of the weak outlook for the public finances, with Ms Reeves needing to fill a multibillion pound black hole to ensure the government meets its own fiscal rules.
Treasury insiders have sought to play down the prospects of such a move during private discussions with bank executives in recent days, but the timing of Mr Postings’ letter underlines the heightened anxiety in the sector following the sharp recovery in its profitability in recent years.
“As many of our members have recently noted, efforts to boost the UK economy and foster a…
